In the first post in this series examining CombineNet's most recent chapter, I provided background and context behind the history and current details of the CombineMed investigation, nearly all of which is fascinating yet irrelevant when it comes to CombineNet's current solutions and go-to-market approach. CombineNet's President and COO Rich Wilson, who previously oversaw part of the organization's operations and larger customer engagements, is the leader of a new era in the company that appears more customer and product focused than before. In contrast, the previous organization was led by Tony Bonidy, an executive with a reputation for being far more focused on sales and business development than operations and solution leadership. This last point is important because during Bonidy's tenure, CombineNet truly represented one of the largest optimization brain trusts in the world, leaving the non-solution and R&D focused executives to concentrate on other matters.
But today, much of the original R&D brain trust is no longer formally involved on a day-to-day basis with CombineNet. Jason Brown, the former CTO, has recently left the organization along with Tuomas Sandholm, who previously served as Founder and Chief Scientist. The departure of these two executives and others has created a culture that appears more focused on the pragmatic delivery and development of existing capabilities rather than on pushing the limits of next generation solution capability. Still, it does give rival vendor Trade Extensions, who has close ties to the optimization community in Sweden, a leg up when it comes to academic R&D involvement today. Even though CombineNet has taken a hit from an academic R&D viewpoint, it still has over forty people in the organization focused on product development, product management, solution configuration/implementation and areas of traditional software R&D.
This development and product organization is working with Rich Wilson and the rest of the management team to oversee an evolution away from delivering merely services that leverage software to a more flexible solution delivery approach that can enable CombineNet customers to utilize software independent of services for specific engagements (CombineNet shared with Spend Maters that customers can get started with their software today without using services; "training is suggested" but "typical configuration services are no longer required."). By way of history in this context, CombineNet began by delivering a heavy services component in its approach, pursuing projects where the relatively high cost per engagement was justified based on large spend levels. This required significant customization of the underlying CombineNet software code in many cases, creating unrepeatable, un-leveraged engagements and custom development.
Still, the early (before 2006-2007) CombineNet approach combined an underlying optimization platform with expert services for data gathering, integration, market/system design and analysis, among other areas. It compressed a typical time frame for very large and highly complex negotiations from nine or so months to less than 50% of the previous time (while delivering better results in the process). But it also limited CombineNet to working on only a handful of projects each year per client -- not to mention creating an unprofitable business model in many cases -- because of the narrow applicability and focus of the types of negotiations involved.
By 2006 and 2007, CombineNet began to more aggressively focus on streamlining its cost of delivery by reducing configuration expenses and creating greater modularity and reusability of underlying components and templates (for data collection, bid/scenario analysis, etc.). By this point in time, they began to take a more category-centric approach to positioning services by reducing the amount of custom configuration required in existing areas where they already had experience (e.g., transportation). Still, CombineNet team members got involved in project implementation and related management services for all engagements. We spoke to many companies who worked with CombineNet during this time, and they remarked that the amount of configuration (if not customization) required on a per-event basis was quite high, and that customers (rather than investors) were the ones getting "the best deal" given the work involved.
CombineNet knew at the time they would need to continually evolve their focus and capabilities to deliver greater self-service within their solutions. This direction would lead to an expanded set of offerings with the potential to cover a materially larger percentage of a company's overall spend and sourcing footprint rather than simply reducing CombineNet's cost to serve through greater automation and expanded self-service configuration. Stay tuned as we investigate this solution strategy migration as well as how CombineNet's current product footprint looks in the market. Things have changed dramatically not only in recent months, but recent weeks, and this is an organization taking, shall we say, a very novel approach to playing in a bigger sandbox than before.